Farming sector ‘robust’
After a challenging 2017 season for Mid West farmers, there was a positive feeling in the room at the Planfarm Bankwest Benchmarks launch in Geraldton last Wednesday.
The Benchmarks is a leading annual report into the financial and production performance of broadacre farm businesses across WA.
Its findings come from a survey of 550 Planfarm, Bankwest, Business Ag, AgAsset, and Bedbrook Johnston Williams clients.
The report found WA farmers had a turbulent 2017 season, with summer rainfall triple the 10-year-average, followed by one of the driest starts to the season in the past 10 years.
This was followed by a dry autumn and an early winter, and good rainfalls in spring.
The favourable spring weather allowed farmers whose crops had not been significantly damaged to achieve close to average production, while some achieved exceptional production levels.
Yields of wheat, lupins and barley remained above the 10-year average, the report found.
“Aside from canola, for which pricing remained high for much of the year, pricing for all cereal grains remained persistently low until after harvest,” it said.
“Wool and sheep prices, on the other hand, continued to rise to their highest levels in recent memory.
“Strong returns for wool and sheep, along with a very dry start, saw farm businesses that have livestock allocate a five-year high 29.3 per cent of their land to sheep and wool in the year to February, 2018.
“Greater volatility in the 2017 production year was illustrated by the largest difference in return on capital between the top 25 per cent and bottom 25 per cent of farm businesses in 10 years, of 12.2 per cent and -3.6 per cent respectively.”
The report also found farm equity remained stable in 2017 at 79.4 per cent.
Speaking at the launch, Planfarm farm management consultant Rob Grima said agriculture was a “volatile” but “very robust” industry.
“There is money to be made, and it’s a great industry to be involved in,” he said. “That’s something we should all be singing from the rooftops to try and get more youth into our industry to take up the positions that are required to be taken up.”
Mr Grima said after receiving 200mm of rain in January and February, followed by disappointing falls until late July, Mullewa farmers had a “reasonable yield” after receiving a total 400mm over the entire season.
He said Mullewa showed great potential.
“Not many want to move to the low rainfall areas such as Mullewa, but if you were an alien landing on Earth right now and you had money to invest in agriculture, where would you get the best return for your investment? Out there,” he said.
Mr Grima said Mingenew received less summer rainfall but a season total of 350mm.
“In that middle-of-May period, they managed to eke out maybe 20mm of rain, and there were crops that came out of the ground — although they didn’t look great,” Mr Grima said.
“They were thirsty, but they were out of the ground and (farmers) had something to play with.
“But after a long period of small amounts of rain, there was 100200mm in a very small space of time.
“And the crops were actually . . . business as usual for those farmers, by and large.”
According to the report, strong returns in the past 10 years showed the strength of WA’s broadacre farming industry, with the return on capital of 5.2 per cent in 2017 slightly below the 10-year average of 5.5 per cent. “We had a much better return on capital across the whole State last year; equity improved marginally; our operating costs were slightly lower as a percentage of gross farm income; and our operating profit as a result has increased substantially for the whole of the State,” Mr Grima said.
Bankwest head of rural and regional banking Greg O'Brien said 2017 had been a positive year marked by challenging conditions and increased use of new technology.
Planfarm farm management consultant Rob Grima said the agriculture industry was "volatile" but there was plenty of money to be made.